Tran Huu Hiep
Saigon Investment - 09/10/2024 05:18
(SGI) - Some people have expressed surprise at Vietnam’s near $1 billion expenditure on rice imports in the early months of this year, especially considering the country is one of the world’s top rice exporters. Does this represent a paradox in Vietnam's rice import-export dynamics, or is the nation entering a new phase in its rice strategy?
In the first nine
months of this year, Vietnam exported over 7 million tons of rice, earning
$4.37 billion in revenue. Yet, paradoxically, the country also spent nearly $1
billion on rice imports for domestic consumption. The total rice import
expenditure is expected to rise further, potentially reaching $1.3 billion by
the end of 2024.
At first glance,
this situation seems counterintuitive, given that Vietnam has re-emerged as a
rising star in the global rice market over the past three decades, firmly securing
a position among the top three rice-exporting countries. In the past two years
alone, Vietnam’s rice industry has reached record export levels and achieved
high prices. At times, Vietnamese rice even surpassed Thai rice in price,
making it the highest-priced on the market. Vietnam’s rice sector is
transitioning from merely producing rice to becoming a key player in the global
rice economy, focusing on quality and branding.
So, why does
Vietnam import rice? In recent years, most farmers in the Mekong Delta,
Vietnam’s primary rice-growing region, have shifted to cultivating high-quality
rice varieties. They’ve embraced good agricultural practices, built strong
brands, and targeted the high-end rice market, where prices are significantly
higher. Meanwhile, there remains a steady demand for regular, lower-priced rice
varieties used to make staple foods like noodles, rice paper, and vermicelli.
This explains why Vietnam, despite being a leading rice exporter, imports
mid-range rice varieties as raw materials for its domestic food industry.
Statistics show
that the average export price of Vietnamese rice in the first nine months of
this year was around $624 per ton, up 13.1% compared to the same period last
year. In contrast, according to businesses, the cost of imported rice into
Vietnam ranges from $480 to $500 per ton. With such a significant price
difference between exported and imported rice, Vietnamese enterprises logically
opt for lower-priced imported rice for use in the domestic market.
Solving the business
equation is about managing supply and demand while weighing costs and benefits.
When domestically produced rice is priced higher, it’s only natural for
businesses to import cheaper rice for raw material use. From this perspective,
spending $1 billion or more on rice imports for domestic consumption, while
still profiting from rice exports, is not paradoxical at all. In fact, it makes
sound business sense.
Moving Toward a
Rice Economy
Vietnam’s rice
economy is now being approached from a different angle, marking a historic
shift. The rice industry is evolving from a single-sector, single-value system
to one that integrates multiple sectors and values, bringing in diverse income
streams and benefits. This approach seeks to address long-standing challenges in
rice farming, including the unstable income of rice farmers, by balancing
economic, social, and environmental interests.
One of the key
initiatives driving this shift is a sustainable development plan for 1 million
hectares of high-quality, low-emission rice production in the Mekong Delta.
This plan is closely linked with green growth and holds great promise for the
region’s future. The development of this rice-focused economic zone is being
strategically mapped out in a physical space that integrates a range of
resources, including natural advantages, financial investments, scientific and
technological advancements, and most importantly, human resources. The plan
involves close collaboration among key players in the rice value chain:
businesses, cooperatives, and farmers.
One promising
aspect of this new approach is the potential for additional value through
carbon credit sales, as a result of low-emission rice farming. This new
economic model not only brings about financial gains but also carries significant
social and environmental responsibility.
The question of how
much rice Vietnam should import and export for maximum benefit is not solely a
matter of numbers or national pride. Instead, it’s a market-driven issue, one
that depends on the business decisions of enterprises and market regulation, supported
by sound policies. Merely being a major rice exporter doesn't mean a country
should not import rice, especially when it makes economic sense to do so.
The future of rice
farming and farmers’ incomes in Vietnam must be viewed through the broader lens
of a smart agriculture sector and modern rural development. The future lies in
linking rice production with businesses and other industries to add value. The
era of relying solely on the rice field is over. Vietnam needs to continue
pursuing larger-scale production, adopting better technology, and enhancing
management practices. Deep processing, innovation, and value creation from rice
through the development of post-rice industries, along with branding rice
products, can multiply the value of the rice industry many times over.
Vietnam also needs
to be prepared for competition in both rice exports and imports, as the global
rice market offers new opportunities. Adopting a fresh approach will help
Vietnam expand the "rice pie" and carve out a larger share of the
rice economy.
Vietnam must shift
from a narrow focus on how many hectares of rice are planted or tons of rice
harvested, to a broader vision of creating multi-dimensional value from rice.
Only by embracing this transformation can Vietnam harmonize interests and
create a larger, more sustainable rice economy. The future of the country’s
rice sector lies not in the number of tons exported, but in the value that can
be derived from each grain of rice.
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